Co-operative corporation social ventures

You have an idea for a business activity that will generate a blend of social and/or environmental benefits and revenues for your organization. You are ready to launch a social venture.

Under current legislation in Ontario, there is no legal structure that combines all of the benefits of both the for-profit and not-for-profit worlds. Your organization must carefully consider the current legal environment and existing legal structures in order to choose the best corporate structure to meet your objectives.

Co-operative corporations are one option that provides a flexible foundation adaptable to for-profit, not-for-profit or even charitable objectives.

Co-operative Corporations

Incorporated under the Co-operative Corporations Act (Ontario) or Canada Cooperatives Act (federal), either with or without share capital

In Canada, co-operatives are often seen as the original form of social enterprise, as they are incorporated to meet the needs of their members and communities. Co-ops are member controlled through a democratic one-member, one-vote system.

The members of a co-operative corporation may be the customers (consumer co-op), employees (worker-owned co-op), independent producers or professionals (producer co-op), or a combination of those (multi-stakeholder co-op).

Co-operatives are scalable. Consumer co-ops may have anywhere from a few dozen to tens of thousands of members. Worker co-ops, jointly owned by the “employees”, and producer co-ops, jointly owned by individual businesses or entrepreneurs, may have as few as three members or many hundreds or thousands.

Co-operatives can incorporate with or without share capital. Those with share capital can offer membership shares (which confer membership rights) and preference shares (which provide a fixed return and can be offered to members and non-members). Surplus generated can be distributed to members based on the amount patronage (for consumer and producer co-ops) and/or as additional shares.

Pros

Co-operative corporations have a long track record in Canada, established provincial and national federations with support services, and a significant presence in many sectors of the economy.

Co-operatives have twice the survival rate of other business structures.

The group ownership structure of co-operatives ensures that the enterprise remains democratically accountable to its members and continues to address their evolving needs.

Cons

Because co-operatives are democratically accountable to members, decision-making can take longer and require consideration of a wider range of stakeholders and objectives than traditional businesses.

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